The World Cup and Stock Market Performance

I stumbled on a  new working paper that examines the return on the S&P 500 Index during the World Cup over the last 60 years.  The study concludes that the S&P 500 declined by 2% on average during the Cup, so shorting the S&P 500 would have been a profitable investing strategy.  The author claims that this decline reflects reduced productivity while the Cup is played (for the record I have the France-Mexico match on the TV while writing this post – what productivity decline?), much like the well-documented calendar effects.

The “paper” has the lousiest formatting I have ever seen (black background? yeah, that’s a great idea!), and is a little sketchy on methodological details.  My biggest problem with the paper is the use of the S&P 500.  People in the US don’t really care passionately about the World Cup.  I think the onus is on the author in this case to convince readers that the observed returns are not simply spurious.  Why not use an international stock index of some sort?  I would be more convinced if the DAX or FTSE declined during the Cup.


One Response to The World Cup and Stock Market Performance

  1. nickwatanabe says:

    I totally agree,

    Seems hard to believe that any Americans really cared about the World Cup in 1950, when it was being held in Brazil. Even though the American’s pulled the famous upset of England that we still talk about 60 years later like it was just yesterday, there was but a single American reporter at the World Cup, and from what I read, he had a hard time even sending reports of the games back to the U.S.

    I don’t think anyone in the U.S. really has paid attention to World Cup’s until probably 1990 or 1994 to be honest.

    Also that formatting is rather… interesting.

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